Memorandum submitted by The Royal Association
of British Dairy Farmers (A13)

On behalf of the Royal Association of British
Dairy Farmers I respond to the Committees inquiry into the future
of UK Agriculture. Clearly the main focus of this Association
is the dairy sector but many of these remarks can be related to
farming as a whole.

BACKGROUND

It is recognised that agriculture and particularly
livestock production systems have reached a crossroad. In a rapidly
changing industry farmers currently face confusing options of
specialising, retiring, diversifying, or producing to niche or
commodity markets. It is also recognised that society will greatly
influence the shape of farming systems and that Governments too
via WTO and international pressures will have a long lasting decisive
influence.

INDUSTRY STRUCTURE

In terms of the dairy farming sector, the numbers
of producers have declined steadily at about 3-4 per cent per
year for many decades. A greater decline can now be expected due
to lower milk prices and generally lower returns. There is evidence
that sons and daughters of farming businesses are leaving the
land to pursue other careers in worrying numbers, and there is
real shortage of skilled workers needed for more technical and
business driven farms.

Over this same period the industry has had to
respond to a number of key milestones; introduction of production
quotas in 1984, de-regulation in 1994 followed by the enforced
fragmentation of Milk Marque. BSE, foot and mouth disease, currency
changes have all had, and will continue to have, an influence
on the structure of the industry. It should also be pointed out
that most of these issues were driven by Governments and all cases
were outside the control of farmers.

The number of registered producers in the UK
is currently in the region of 28,000. Many forecasters will argue
that by 2010 the figure could well have fallen to nearer 15,000
with the majority of milk supply coming from less than 10,000
producers. The result will be more business-like, market driven
dairy farmers but they will increasingly be subject to overseas
competition from the worlds dairying countries.

THE REASONFOR SUBSIDY

It should again be stated that subsidies were
introduced not to "featherbed" the farming industry
but to avoid shortages and ensure a plentiful supply of relatively
cheap food to UK consumers, in other words, a consumer subsidy.
Quotas were put in place to regulate markets and to meet the above
aims. It should be argued that subsidies are designed to follow
farmers to produce and sell their products in some cases below
the cost of production. I add that in the case of dairy farming,
during the last two years the costs of production including subsidy
have for many been greater than total returns, clearly an unsustainable
position.

The Inquiry must recognise that subsidy in the
UK is relatively transparent. It is not always so in other competing
countries such as the USA for example, where there are various
means of supporting agriculture such as weather payments, some
direct payments as well as various import tariffs.

PROSPECTSFOR
SUBSIDIESAND
QUOTAS

Most dairy farmers would be prepared to accept
removal of production subsidies but with a number of assurances.
There is much talk of "level playing fields". It is
recognised that such equality will never fully be achieved but
UK farmers will continue to be at a disadvantage if the US and
other countries continue to support their sectors whilst other
EU member states have less transparent support (cheap loans, exit
programmes).

From a position of food standards and safety
as well as competitiveness, there is surely a need for imported
foodstuffs to have been produced to the same standards of welfare
and general farm assurance as food produced here. Appropriate
and meaningful labelling is an essential requirement.

There is also a need to ensure that within the
UK the various segments in the food chain are not allowed to exploit
their positions. Currently dairy processors and food retailers
hold stronger positions in the market than do producers. Government
interference in market operation varies; the enforced break up
of the farmer owned Milk Marque resulting in fragmentation does
not appear to have been matched with similar challenges to the
retail sector nor to other recent market mergers.

Further trade liberalisation and enlargement
of the EU are seen as inevitable and are issues about which UK
farmers can again do nothing. The UK Government has declared its
intention to remove the constraints of milk quota, which is seen
by it as a barrier to viable dairy farming. Controlled removal
of quotas, whilst not pleasing all dairy farmers, would be manageable
as market requirements, and to some extent processing capacity,
will ultimately control the raw milk supply. It is, however, unrealistic
to expect UK dairy farmers to compete with producers from overseas
with few constraints and cheap, if any, paid labour.

STEWARDSHIPOF
LAND

It is not always clear what is meant by "stewardship
of land". It could be interpreted as maintaining an attractive
and pleasing countryside or simply producing a countryside dominated
by set aside or arable stubble. Policies which remove large areas
of land from farming, will result in desolation. An attractive
countryside is likely to be the more acceptable to the public
but it can only be achieved in the future if agriculture is profitable.
Incentives to, and not controls on, farming businesses and others
that have a stake in the countryside best assure good stewardship
of the countryside.

OPPORTUNITIESAND
DIFFICULTIES

One of the main points of this submission reflecting
the main difficulty of planning for a future without subsidies,
is that Government does not have a strategic or business plan
for agriculture. Historically, Government has been responsible
for regulating the market and now to abruptly withdraw and leave
the industry to market forces is unacceptable. The RABDF argues
that government has a responsibility for overseeing the various
chain links within food production built from a science base,
where safe imports are assured, labelling is standardised, retailers
do not exploit their positions and that biosecurity runs the length
of the chain. Farming must be allowed to be competitive.

If such responsibilities are not adopted, agriculture
will see the development of factory style livestock units with
downward pressure on welfare. It is likely that large areas of
land will not be farmed. Such developments could have a negative
effect on land values, house prices in rural areas and rural employment.
The recent outbreak of foot and mouth disease clearly demonstrated
the importance of agriculture to tourism and the rural economy
generally.

UK producers have the ability to produce high
quality, safe food and implement good countryside stewardship,
but not if exposed to cheap, supported, lower quality imports.
A strategic plan for UK agriculture, with a proactive government
department, would aid the creation of an efficient agriculture
and rural economy. It would include promotion of the best of British
to overseas markets and help create a prosperous agriculture.
To do so would not conflict with the principle of subsidy removal.

A prosperous agriculture is fundamental to continuing
the supply of quality, safe food, ensuring good stewardship of
land and provision of a basis for a healthy rural economy.

The Royal Association has no objection to this
submission being made public and would be pleased to assist the
Inquiry further with provision of oral evidence if so required.